CANTON, OH — Timken today reported record third quarter sales of $1.3 billion, up 15 percent from $1.1 billion last year. Net income of $39.8 million or 43 cents per diluted share, was more than double last year’s third quarter net income of $17.5 million or 19 cents per diluted share. Excluding special items, earnings per diluted share of 58 cents were more than double the 27 cents per diluted share reported a year ago. Special items in the third quarter of 2005 totaled $28.3 million of pretax expense, which was primarily for restructuring automotive operations as well as for industrial manufacturing rationalization.
“We delivered strong performance this quarter as we continued to capitalize on the ongoing strength of global industrial markets,” said James Griffith, president and CEO. “While we had record third quarter results in the Industrial and Steel Groups, our Automotive Group performance continued to be challenged.”
“We are focusing our growth initiatives to take advantage of the strong industrial demand. We have continued to add industrial bearing capacity around the world and invest in acquisitions in key markets to complement organic growth,” Mr. Griffith said. “The record performance in our steel business reflects leveraging strong demand in industries such as aerospace and energy.
In our automotive operations, we began our restructuring program to reduce fixed costs and improve performance as we deal with the difficult environment in the North American automotive industry.”
For the first nine months of 2005, sales were $3.9 billion, an increase of 17 percent from the prior year. Earnings per diluted share for the first nine months were $1.79 in 2005 versus 79 cents in 2004. Excluding special items, earnings per diluted share in the first nine months of 2005 were $1.99 versus 91 cents in 2004. Special items in the first nine months of 2005 totaled $33.1 million of pretax expense, compared to $18 million a year ago.
The company’s effective tax rate for the first nine months was 31.4 percent, down from 34.8 percent in the first half due primarily to benefits related to export tax incentives as well as improved earnings in certain foreign jurisdictions. Excluding special items, the effective tax rate for the first nine months was 33.1 percent. The company expects to maintain this rate going forward.
Total debt on September 30, 2005 was $802.6 million, or 36.4 percent of capital. Total debt was reduced $39.5 million from the end of the second quarter. The company expects to continue to reduce its debt levels and leverage during the fourth quarter.
The company is increasing its full-year earnings estimate, excluding special items, to $2.55 to $2.65 per diluted share from the prior estimate of $2.40 to $2.55. Strong industrial markets should continue to benefit Industrial and Steel Group performance in the fourth quarter. The company also expects to see continued improvement in its Automotive Group, despite the challenging environment in the North American automotive industry. In commenting on the financial outlook, Griffith said: “We expect to continue benefiting from our participation in diverse industrial markets. In particular, increased activity in mining, oil and gas and other energy-related markets should result in additional demand for our products.”
To learn more about Timken, go to: www.timken.com.
_______________________________________
